Starting with GNUCASH

[David Carlson]

On 12/7/2012 9:34 PM, Jeff VanderDoes wrote:
> Thanks so much for the feedback from all!  Now a follow-up question..  Most
> of my entries for mortgage payment come from online transactions from bank.
>  Since I don't know the split out between principle interest, and escrow.
>  (I can do some homework and figure it out eventually... I can est pretty
> close my escrow)  Before I put transaction in in final form (ie figure
> interest,  principle, escrow) or is there a way to bring it and later split
> it out later?
>
>
> Thanks,
> Jeff
>
>
>
> On Fri, Dec 7, 2012 at 5:53 AM, Mike or Penny Novack <
> stepbystepfarm at mtdata.com> wrote:
>
>>
>>> Loans have me a little baffled. Say mortgage has payment and some goes to
>>> reduce principal and some goes to escrow for taxes and insurance and
>>> interest on loan goes to expense account.  Do I use the accounts and minus
>>> from checking and add to escrow. then do another set of transactions minus
>>> from escrow and add to interest expense; credit from escrow and debit (I
>>> get debit and credit confused) mortgage loan... then when taxes paid
>>> credit
>>> from escrow and debit home insurance (expense account)?  Do I ever have a
>>> transaction to some type of equity account?
>>>
>>>
>>>
>> You can do it in separate transactions but since your payment is actually
>> a single item from your bank account more normal would be to use a SPLIT
>> transaction (a transaction involving more than two accounts). The escrow
>> account is an asset belonging to you (your property) except not under your
>> control. Just like another bank account (some bank account controlled by
>> the institution processing your mortgage). It should be in your books as an
>> asset account. Then when you get a statement from the institution
>> processing your mortgage that they have used some of these funds (to pay a
>> tax bill, to pay an insurance bill, whatever) you enter a transaction to
>> reflect that.
>>
>> So each mortgage payment would be:
>> debits:
>>    Loan principle
>>    Loan Interest
>>    Escrow
>> credits:
>>    Bank account (this would be entered first, then hit SPLIT, adjust the
>> other side amount to the first account you want to do and enter that
>> account, then proceed with the remaining amount till all allocated)
>>
>> Michael
>>
>> PS -- As always I will repeat, gnucash AUTOMATES the bookkeeping, posting*
>> from journal to ledger, but that doesn't substitute for knowledge about
>> basic bookkeeping. This automation is important/useful since transcription
>> errors during hand posting was one of the major sources of errors in the
>> old pen and ink on paper days. If the documentation provided with gnucash
>> isn't enough for you, get a book on "basic accounting". We can help you
>> with "how to do it using gnucash way" but you may still need help with
>> "what should I be trying to do".
>>
>> --
>> There is no possibility of social justice on a dead planet except the
>> equality of the grave.
>>
>>
>>
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What I do with this type of transaction is to first create one that has
the form I want to see with all the splits populated with real or
estimated values, then I highlight that transaction in the checking or
asset register and click on Schedule Transaction.  If there are
estimated values I put the word Sched in the Num field and set the
schedule to Monthly or whatever is appropriate.  I like to see them
appear in the register several weeks early so I can plan cash flow
around them.  I don't care to use the mortgage and loan repayment wizard
but you might want to try it if it is a new loan.  I believe that wizard
tries to estimate the interest each month (or whatever interval you
select). 

Eventually the bank statement comes and I then correct the estimated
values and change the word Sched to EFT.

I really like Michael's tip to enter the total first before entering the
other split lines.  That makes creating splits a lot easier.  I won't
reveal how many years I had been doing it the hard way.

You do need to get used to GnuCash re-arranging the split lines when
using the Enter key to complete the transaction. 

David C
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